after its amazing stock & earnings run, why might the next round of earnings be disappointing for corporations and investors? in today's cover story, the epic labor battle happening in america's classrooms. plus, how hackers are outsmarting your smart phone. why your cell could be a target. and the latest in commuting, driving to work with you hands off the wheel and your eyes off the road. that's all ahead on today's first business. you're watching first business: financial news, analysis, and today's investment ideas. good morning, i'm bill moller. angie is off. here's our first

look. older consumers are sure spending more - on medical bills. a study in a medical journal finds late-in-life out- of-pocket medical expenses are a lot bigger than most retirees anticipate. in the last 5 years of life, the average costs for individuals were nearly $40,000, and more than $50,000 for couples. this is the last week of work on capitol hill before they head home to campaign. can they get something done? there will be debate on tax reform, the proliferation of computerized trading, and corporation offshore shifting of profits, and a continuing resolution to keep the government funded until late march. that's expected to pass. nothing's planned on what to do about the fiscal cliff. and there's always something to talk about in europe. in greece, a week of strikes began yesterday involving, doctors, teachers, bus drivers - even judges. everyone's upset about the austerity program to meet terms of the eu bailout. as we always do, we begin with

an overview of the markets with a trader. today, it's mark sebastian. he is with option pit mentoring and consulting. we didn't have much excitement in the markets yesterday because it was rosh hashanah. let's talk about commodities. what was behind that big plunge in oil prices? > > well, there was a rumor in the afternoon that we were going to get a release of the strategic oil reserve. when you have big risk premium built into oil, typically when we get these type of rumors, it can cause oil to go tumbling, and we saw that in the afternoon when that rumor started to hit the pits. > > corn and soybeans, there was a trade limit on that, is that right? > > soy was. corn barely missed. both got smoked because the crop report did not come in as bad as many people were expecting. still bad, but just not as bad. > > let me ask you about apple. it's been up over 70% the last year. it hit $600 fewer than six months ago, and now yesterday crossed into $700

territory. americans just love their apples. this can't keep going on forever... > > there are people out there who will argue that it can. i tend to agree with you. as this stock gets more and more valuable - and we're talking about them adding to gross domestic product - they're going to have to keep innovating, keep growing, keep being at the cutting edge of every product to be able to maintain this kind of sales growth and this kind of capture of the market. do i think it's worth $700 today? yes. do i think it's worth $700 in five years? i'm not so sure about that. they're going to have to really continue to innovate. > > mark sebastian, you have a good trading day out there. > > you too. in our cover story, the labor battle between striking teachers and the nation's third largest public school district is at a junction. a judge rebuffed efforts by chicago's mayor for a court order to force 26,000 teachers back into the classroom. that after teachers balked at ending the strike when they couldn't get details of a so-called agreement. [chantin chicago teachers did not end their strike because some thought their bargaining team had sold out and because lawyers had not provided

teacher delegates with written details, only a summary. "we all feel like we've been lied to, and like any person, you want to know what your signing, what you've agreed to." mayor emanuel tried to force teachers back with an injunction saying "i will not stand by while the children of chicago are played as pawns in an internal dispute within a union." but it's apparent that there's more here than an internal dispute. "they have a deep mistrust of the mayor. he tried to bypass teachers when he wanted to extend the school day. teachers filed an unfair labor practices violation and he had to stop that." so 50 teachers and supporters began the strike's second week not in their classrooms but outside the mayor's office. "i'm a parent and want to say that these teachers should make sure the language is in the

contract that they've been fighting for." "right now it's 'we support the teachers,' but the longer this goes on, the more likely it becomes 'a pox on both your houses, i've got to get my kid back to school.'" the strike in chicago is being watched by teachers' unions across the country, who say they've given in more often than not and have lost bargaining power as a result. "this hasn't been done. teacher unions have generally conceded and at most, said 'well, we got a little.' but in chicago, they've drawn a line in the sand and said we want to use our legal rights." chicago mayor rahm emanuel is trying to impliment sweeping education reforms including

basing teacher evaluations on how well their students perform on standardized tests. teachers want guarantees that teachers laid-off as a result of school closings will be found other jobs in the district. occupy turned 1 year old yesterday, and in the birthplace of the movement, new york city, they gathered and marched. the protests were the same against the enormous wealth of the 1% and the institutions that created that wealth. hand-in- hand with the marching - arrests. more than 100 were taken away by police as protestors tried to form a human wall around the u.s. stock exchange. shannon bond, a reporter with the financial times, tells us it was hard to come up with accurate estimates of the size of the protest because this wasn't one single mass rally. "what they did was organize so the people were broken up into a lot of very small groups that went all over the financial district and a lot of different intersections, so it was hard to contain, but also harder to get a sense of exactly how many

there were." president obama is calling on the world trade organization to settle a trade case with china. the obama administration is accusing china of unfairly subsidizing exports of cars and car parts. the president says it gives chinese manufacturers an unfair advantage in the market. cars.com analyst joe wiesenfelder tells first business that if the world trade organization accepts the action, the impact to consumers could mean higher prices. "i don't think companies export jobs or buy parts from foreign companies because they want to, they do it because there is a profit advantage to it. so if this action goes through and the chinese are no longer subsidizing the parts that are important, it could raise the prices."

meanwhile, the topic of trade is coming more in focus on the campaign trail. "we are going to stop it. it is not right and we will not let it stand." "now the president may think that announcing new trade lawsuits less than a month before the election will distract from his record, but americans and workers struggling in an uneven playing field know better." in ohio yesterday, president obama addressed the trade issues and fired back at mitt romney, who has accused the president of not taking enough action against china. what's wrong with this picture? young people aren't buying cars like they once did. what happend to a set of wheels being a right of passage? the trend cannot be denied. the share of new cars bought by people 18 to 34 years old is down 30% in the past 5 years. is it the economy? some say so. but it may be demographic. the young in ever larger numbers are living in cities and prefer the convenience of public transportation and zip cars to the cost and headaches of owning your wheels. also, social media, where the young go to interact instead of hopping in a car to go cruising.

general motors and the u.s. government are feeling some tension over a deal for shares in the automaker. the u.s. propped up the company with a $50-billion bailout in 2009, and now the u.s. owns over 26% of the company. gm wants to buy back 200 million of the 500 million shares that the u.s. government bought. at its current stock price of around 23 dollars, the u.s. would lose about $15 billion on the gm bailout if it sold its entire stake. according to reports, gm stock would have to rise above 53 dollars a share for the u.s. to break even and consider the bailout a success. we'll take a more in-depth look at gm's stock later in chart talk. consumer spending is the core component of our economy. high household debt has been a damper on spending, but things are looking up. usa today reports that consumer debt levels are dropping, housing is improving and the lift in the job market could boost consumer spending by 3.5% by the end of 2013. it was out-of-control debt that brought on the recession, but, apparently chastened,

we're managing household cash flow a lot more wisely, and are regularly setting money aside to shrink credit card and other debt. corporations could be bracing for a drop in profit. wall street is expecting a drop in quarterly profits at american corporations. the new york times reports that this will be the first time corporate profits decline since 2009. weakness in economies such as china and europe is said to be contributing to the corporate slump. mcdonald's is hoping the mcrib will brighten the holidays. sales of the sandwich will begin in the middle of december - a bit later than last year - to increase mid-year sales. that's before it debuts a new concept called "mcnoodles." the new menu options are offered only in austria at this point. it's part of mcdonald's' effort to feature more asian menu offerings in its global

expansion. still to come... "look ma, no hands." driving to work in your car with no hands on the wheel. we'll take a peek at the future of commuting. first, smart phones: the next frontier of opportunity, for hackers. we'll be right back.

ever wonder why your smartphone has never been hack attacked? all those passwords and

personal information. is it happening, and the number of attacks has been going up. jerry irvine is chief information officer of prescient solutions, and he's a member of the national cyber security task force. just how vulnerable are these little devices of convenience? > > they really are the most vulnerable devices out there. moreso than anything else you're using. > > really? but i haven't heard about any mass attacks. > > it's very hard to track where an attack is originating from. i could steal your personal information from that, then access your bank or your corporation from another location. so, you may not know that i got the information from you, but the information was obtained from you. > > so hackers are going after these phones. do we have any numbers? > > last year, over and above from last year, we're already at over 600% more malicious applications and threats that are occurring, and we're 9 months into the year. > > do you believe it's really only a matter of time before there's going to be some kind of a mass attack on cell phones? > > again, i believe it's happening already and we're not detecting it. the types of risks really do come down to

people's individual financial information. but as more companies are going to bring- your-own-device policies, it's going to be even more critical that some type of malicious protection is added to your phone. > > are companies taking any steps for their employees who have company proprietary information on the phones? > > most companies, when you bring your own phone in, they just hook you up to use their application. there are devices out there called mobile device management, or mdm, applications to protect it, but they're still pretty costly, and as a result, the small- and mid- size companies just aren't using them yet. > > what do i do? just sit around and wait for something bad to happen? > > i think the most important things are the basics. put a password on your phone. most phones today have no password

at all. > > i don't do that. it's kind of a hassle. > > it is. you're going to have to type it in every time you answer your phone or anything. but that alone will save your data a lot. the next step is to find an anti-virus solution. for iphones there just aren't a lot of them available, but for droids and microsoft phones, they are readily available- > > these are apps? > > applications you can download from the android app store or microsoft app store. even some basic ones on the iphone. but, don't get the free ones. you're going to have to pay for it so that you can get a really good application. > > sounds like we're not being protected very affectively. do you think it's only a matter of time before there will be more solutions to this problem? > > yes i do. i think, after a big risk happens, and a company finds out, then it's going to be the scare tactics and the software will become available. right now people won't buy it. > > it sounds like crisis motivation at work. jerry irvine, thanks so much. > > thank you. still ahead, we are going to show you the future of commuting, where you will be able to read almost all the way to work - in your car. next.

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this is going to make you say wow. here's the scene: you're driving to work. after you get on the expressway, you turn your car over to internal & external computers. your car, still rolling, joins several dozen other cars, each with their bumpers just inches apart. you let go of the steering wheel, get some business done, read, take a nap. this is a car train that's rolling toward the city. the idea of autonomous driving technology has just gone through final testing in europe.

it may soon be coming to a highway near us in america. the project is called sartre - safe road trains for the environment. it's part of a public/private partnership, with volvo being a key player. let's talk with erik coelingh, he works for volvo in sweden. erik, what is the purpose of this? what are the advantages? > > when we started this project, we thought the main benefits would be that automated vehicles, self-driving vehicles, would be really safe and we thought we could save fuel. but we also learned, the more we worked with the project, the more time spent in the vehicles, the biggest benefit is really that you can do something else while commuting to work, or while being in your car. > > going 55, 65 mi. per hour with a platoon of other cars, bumper-to-bumper, i let go of the steering wheel. convince me that it is safe. > > it is safe. we have chosen to have a road train with a lead vehicle which is driven by a professional train driver. so, that minimizes the risk of making mistakes. and then this driver, he or she is supported by automated safety technologies as well, in order

to avoid collisions. but even in case something does happen with the lead vehicle, we have so- called vehicle-to-vehicle communication in between the vehicles, so that we can detect if something happens and the following vehicles can react in the blink of an eye. > > there's no gps, there are no magnets in the road. all the technology is rolling along in the vehicles themselves. does that make it more cost- effective? > > yes. something which is unique with this project is we have tried to reuse as much as possible of existing technologies. modern volvos are already equipped with lane- keeping systems, adaptive cruise control systems, pedestrian detection, city safety. this technology forms the base for having the car drive itself. really the only thing that we have to add to this vehicle was a so-called vehicle-to-vehicle communication system. the other things are already there. > > florida might be the first state in the united states where this is tried out. when might that be?

> > we think road trains like this could be on the road in approximately 10 years, or even before that. we foresee things will be improved. adaptive cruise control will be enhanced, more drive support will enter vehicles. but, there's still the issue of legislation. we have to talk and discuss with policymakers how we can modify rules in order to allow this on public roads. one thing we will do is at the end of october, we will have a workshop in washington with policymakers to understand how we can modify legal regulations in an appropriate way. > > it sounds exciting. i'm not afraid of it, i'd love to try it. erik coelingh from volvo, thank you so much. > > ok, you're welcome. will general motors stock reach break-even is it a good value play? and why aren't gm executives being allowed to use their business jets as much? we cover it all in chart talk, next.

our chart talk-meister today is matt shapiro. he runs his own company, mws capital. matt, let's talk about general motors. an interesting value play. it's trading in the low $20s. a lot of people in gm would love to see the government sell its shares, get out. but, it's not yet at a cash level where the government wants to sell. > > right. they don't want to take the loss. and the gm executives, the reports that came out yesterday, of course are chafing at the government. the major wall street banks, the first thing they did was try to get the government off the books, and gm executives - it's a great business move - want to do the same. but the stock just hasn't responded, and actually value plays - let's talk about gm and ford - together are only about 10% of the market capitalization of apple. so there's a lot of room for these stocks to rise. we have a market that seems to be just going up, calming down. these are two stocks, especially gm,

that really haven't responded. investors just don't want to pay for their earnings. gm's forward p/e, bill, is just 6. > > that's hard to believe, but it's 5 i think right now. it's remarkable. what are some of the complaints that gm executives have? i understand business jets and all kinds of restrictions the government puts on the use of those things? > > yeah. it really has. they chafe at the fact that they can't take jets and there's all sorts of restrictions. the connotation is, of course, that the government is still involved. "government motors." and really it would be a major cornerstone if they can get out from under the government's purview. i've owned gm since i bought the bonds in bankruptcy, the payoff has about doubled, but it hasn't really responded as well as it can. it came out at about $30. it's sitting at $23. the market really needs to take these stocks up. once we have a shift in sentiment, that cyclicality is going to be good and these stocks are going to do well. > > matt, if somebody is looking on the sidelines and considering maybe they want to get into the game, what would be a strategy? > > i think you take a look at these stocks right now, and if the market has a little bit of weakness, a little pause coming into the election, try to pick up both these shares, especially gm. also take a look at ford. because if the economy gets past

this softness in manufacturing, these stocks are going to do very, very well, because so many stocks right now, of course, are a little overextended. > > all right, matt shapiro with mws capital, thanks so much. > > you got it bill. coming up tomorrow, a status check on the state of women- owned businesses. for all of us here at first business, have a great day. . an alameda firefighter is rushed to the hospital, we will have more on the challenges they faced at the scene. a group of protesters were encampmented at justin herman plaza. one of the tors in the

controversial anti-islam film is now speaking out. he said he was misled. this is ktvu channel 2 morning news. good morning, thank you for joining us on this tuesday morning, september 18th, i am pam cook, let's check in with steve paulson with a look at the forecast. it will be breezy to windy and cooling has begun, there is a whopper of a fog is bank out there. i can't find an offshore breeze we stay with the cooler pattern, livermore concord fairfield, here is sal. traffic is moving around well in the bay area. as you can see it is a nice drive from walnut creek to oakland and also we are looking at